Jones court date pushed to March

February 10, 2016

MMA Fighting reports that Jon Jones has had his traffic court date pushed back to March 23rd.  In January, Jones was cited for three traffic violations which brought up the question as to whether it violated his probation stemming from his felony hit-and-run case last spring.

Jones entered into a plea deal with prosecutors this past September which put him on probation for 18-months.  A condition of the probation was that he not violate the law.  On January 31st of this year, Jones was cited for three traffic violations which included driving without a license, driving without proof of insurance and driving without registration.

However, the Bernalillo County district attorney indicated it would not pursue Jones for the traffic infractions would could have violated Jones’ probation.  Jones was given 3 days of community service for not alerting probation officials about his traffic citations.

Jones still lashed out at the media for concerning themselves with the traffic incident.

Payout Perspective:

While Jones may think that the traffic infractions are no big deal, it still could have been a violation of his probation.  It’s not clear the pretense for the traffic stop but not having the basic information needed to drive could be a concern.  Whether he was just running out to the store to get some milk or coming back from training or just had the information in his other pants, Jones did not have the basic information needed for driving.  If you are on probation, wouldn’t you want to be extra careful about any missteps.

Show Money Episode 8 talks MMA Free Agency, PBC and more

February 8, 2016

We’re back with Episode 8 of Show Money.  Myself and Bloody Elbow’s John Nash and Paul Gift talk MMA Free Agency, the state of PBC, the Conor effect, the UFC lawsuit and more…

 

UFC announces extension of commitment to brain health study

February 6, 2016

The UFC announced a 5-year extension of its commitment to the Cleveland Clinic and pledged $1 million to its study on brain injury.  The UFC’s donation makes it the largest combat sport contributor to the study.

The $1 million contribution will go the clinic’s Lou Ruvo Center for Brain Health in Vegas where the study is conducted according to the press release.

“UFC is always looking for opportunities to invest in industry-leading health and wellness programs and providing resources to develop its athletes inside and outside the Octagon,” stated UFC COO Ike Lawrence Epstein.

Per the press release:

Established in 2011, the Professional Fighters Brain Health study is focused on developing methods to detect the earliest and most subtle signs of brain injury in athletes exposed to head trauma, as well as determining which individuals may be more likely to develop chronic neurological disorders. Now in its fifth year, researchers are confident the findings will benefit the safety and health of professional fighters as well as those exposed to repetitive head trauma in other sports and activities.

This time last year, the UFC along with Bellator, Glory, Golden Boy Boxing and Top Rank announced its joint support of the Cleveland Clinic study on brain health.

The study is to monitor active fighters and is also used by the Defense Department in hopes of using its findings for other brain injuries related to military duty.

Payout Perspective:

The pledge and commitment to continued examination of the effects of brain trauma is a worthy cause in combat sports.  The question is what findings are coming out of the study and what are the takeaways that can be implemented for the sport.  Of course, this is also a public relations and preventative measure from litigation.  The NFL is under ongoing scrutiny based on how it has handled head-injuries in its sport.  The most recent report against the NFL, cites the league’s influence in a study it had previously funded.  This news should be something to look out for in the future if the study yields information contrary to the beliefs of the UFC.

PBC seeping money, when will it turn around?

February 5, 2016

Earlier this week, the LA Times’ Larry Pugmire wrote about the state of Al Haymon’s Premier Boxing Champions.  In essence, the business strategy is not working thus far.

Pugmire looked over commission records, network ratings and the expenditures PBC has paid out.  At this point, PBC is seeping money with no end in sight.

According to the Times story, Waddell & Reed, the investment firm that has backed PBC with $425-$525 million in capital.  Waddell & Reed fund manager Ryan Caldwell assisted Haymon in pitching NBC Sports about bringing boxing to the network according to a Sports Business Journal report last spring.  Per the SBJ story, three funds managed by Waddell & Reed contributed to the PBC (or at least an entity known as Haymon Boxing).   Ivy Asset Strategy attributed $371.3 million to Haymon, WRA Asset Strategy provided $42.2 million and Ivy Funds VIP Asset Strategy contributed $18.5 million.

Waddell & Reed is going through tough times of its own.  Its shares fell 14% after it announced weak financial results and the retirement of one of its top fund managers.  The investment firm has lost out on big bets on gold and Chinese stocks which has caused investor concern.  According to a recent Wall Street Journal report, Waddell posted a 22% decline in fourth-quarter earnings and the company announced plans to cut expenses.

We note that Michael Avery, the top fund manager set to retire at the end of June, was the portfolio manager of an Ivy Asset Strategy Fund.  However, we do not know if he directly worked with or managed Haymon Boxing.  Moreover, we do not assert that Mr. Avery was managing the same fund in which Haymon Boxing was a part.

Pugmire’s article indicates that Haymon paid NBC $2.5 million to telecast PBC’s premier on the network.  In addition, CBS Saturday afternoon boxing telecasts in 2015 cost PBC $300,000 per hour.  The telecasts usually took the form of two hour blocks which meant $600,000

An examination of 10 PBC cards in California and Nevada in 2015 shows that promoters paid $19.2 million in purses and state fees while only collecting $3.9 million from the gate per state information obtained by the LA Times.

The discrepancy can be highlighted by January’s fight between Danny Garcia and Roberto Guerrero at the Staples Center in Los Angeles.  The purse was disclosed at $3.2 million versus a live gate of $508,620.

Although PBC is receiving ad revenues from its broadcasts of $12.5 million over 27 fight telecasts and an undisclosed license fee from Spike TV, the input does not outweigh the heavy output thus far.  Through 2015, PBC on Spike telecasts have averaged approximately 582,000 viewers through 9 events.

As we know, PBC is defending lawsuits in LA federal court from both Top Rank and Golden Boy claiming antitrust violations among other claims related to its business strategy.  One of the claims brought up by the plaintiffs is a “loss leader” strategy in which Haymon knows that he is losing money on the short-term for long-term gains.  Top Rank’s counsel estimates that the losses could amount to $200-$300 million.

Although PBC continues airing events on multiple networks and paying fighters that appear on the cards very well, it’s clear that they are losing a lot of money quickly.  Was this the plan that they had projected?

Payout Perspective:

Although we do not examine the ratings in depth in this post, the NBC network ratings have plateaued since its initial debut.  The ratings on a recent PBC on Fox were on par with what the UFC receives in the same time slot.  The question becomes how much loss can PBC take.  With the company funding this venture not doing well itself could there be a change of business strategy in the future?

Can Fair Use be a defense to use UFC content?

February 4, 2016

MMA Junkie wrote a very nice piece on Wednesday on the UFC’s crackdown on copyright content.  We take a brief look at one of the legal theories that may be a defense to copyright infringement: Fair Use.

The article advises about the UFC’s aggressive protection of its marks.  Like many copyright owners, it searches online including places like YouTube to ensure that content is not used without the express consent of the copyright holder.  Of course, if you ask for consent, it’s likely that the copyright holder may deny your request or license the use so long as you pay the “license fee” associated with the use.

Either way, if you use a copyright owned by the UFC without consent, it’s likely that you may be the contacted by the company’s attorneys and/or receive a “cease and desist” or takedown noticeBJJ Scout, according to the Junkie article, is the latest to discover the broad reach of Copyright law.  Some of its videos were taken down due to purported Copyright violations.

Of course, the main defense to the unauthorized use of copyrighted material is the Fair Use Doctrine.  Fair Use permits limited use of copyrighted material without acquiring permission from the rights holder.  It is one of the limitations and exceptions to the exclusive rights copyright law grants to the author of a creative work.

Under the Copyright Act, the fair use factors include

  1. The purpose and character of the use, including whether such use is a commercial nature or is for nonprofit educational purposes;
  2. The nature of the copyrighted work;
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. The effect of the use upon the potential market for or value of the copyrighted work.

Fair Use is a popular defense but the doctrine is constantly evolving which makes it hard to determine an outcome.

Many people tend to focus on factor number 3, the actual amount of time they use the copyrighted work.  It might be a plausible argument to suggest that a 30 second clip or vine should be considered fair use.  However, courts consider the “substantiality” of the portion used to determine the amount used (see Harper & Row  v. Nation Enterprises).  So, a short clip showing the finish of a UFC fight or a key technique in the fight might be weighed much more than the fact it was only a very brief use of the copyrighted material.

Of course, one of the more famous (or infamous) cases asserting the defense of Fair Use was the 2 Live Crew case (Campbell v. Acuff-Rose Music, Inc.).  If you recall, the lawsuit was based on a parody of the Roy Orbison song, “Oh, Pretty Woman,” which was retooled by the Miami rap group.  2 Live Crew established that its song was a commercial parody of the Orbison song and qualified as fair use.  It prevailed.

More recent Fair Use cases take us down different paths.  Last spring, a federal judge in New York deemed an Off Broadway Play named “3C,” which was a dark version of the 1970-80s sit com “Three’s Company” did not violate copyright laws as it was a “highly transformative parody of the television series.”  Despite having the same characters and appropriating a substantial amount of material from the original ABC show, the judge found the play posed “little risk to the market for the original.”

In another noteworthy case regarding the Fair Use Doctrine, Universal Music Corporation on behalf of recording artist Prince filed a takedown notice to YouTube citing Stephanie Lenz for posting a 29 second clip of her baby dancing to his song, “Let’s Go Crazy.”  Lenz claimed fair use and requested that the video be reposted.  She sued Universal.  After a lengthy court battle the U.S. Court of Appeals for the Ninth Circuit determined that copyright holders must consider fair use in good faith before issuing a takedown notice for content posted on the internet.

The noteworthy thing in the Three’s Company and Prince cases were that the parties sued by the copyright holders received pro bono (i.e., free) legal assistance.  It’s clear that a legal fight is costly and if it were not for the legal teams that were willing to work for free (aside from the notoriety they would obtain from winning), there would not be a case.  Instead, in all likelihood, the copyright holder would win.

While the three cases discussed here (2 Live Crew, Three’s Company and the Prince case) all revolve around parody, a legal theory not claimed by many in the MMA-copyright issue world, the cases show the broad depth and interpretation of the law.

Payout Perspective:

The UFC is familiar with playing hardball when it comes down to its intellectual property.  Notably, last fall, the UFC and the NFL took down the twitter account of Deadspin alleging copyright violations.  Prior to UFC 193, the UFC issued a release to media stating that it would aggressively go after copyright violators as a precautionary measure to ensure that no media members attempted to “vine” the ending of the Rousey-Holm fight.  The thought was that it could be a quick ending which could easily be posted online.  The irony is that Holm won in the second round and the real “vine” ending of a fight occurred about a month later when Conor McGregor knocked out Jose Aldo.

For many MMA fans that used to post videos or gifs with UFC content, they are finding out that some of it may be taken down due to the company’s copyright.  It’s not always even-handed as some items might be online for a while as opposed to other postings which might be taken down immediately.  But, it seems that the only legitimate defense that one might offer is Fair Use.  As we see here, Fair Use is an evolving legal defense to a copyright violation.  But, is someone willing to put up the fight to claim that it has a right to use content based on the theory.  The case law tends to be not too helpful at this point.

The fact of the matter is that the Fair Use Doctrine has been criticized by scholars and attorneys for being “undisciplined” and “unwieldy” in its application and interpretation by courts.  Essentially, the doctrine is not applied uniformly by courts which makes it a guessing game as to how a court might rule when it comes to a party claiming Fair Use when being charged with a copyright violation.  Thus, is it worth it for someone to pay legal fees to fight a claim with an uncertain legal defense?

UFC files Answer to Plaintiffs’ Complaint, parties fight over discovery process

January 27, 2016

Last week, attorneys for the UFC filed its Answer to Plaintiff’s Amended Complaint in the ongoing Antitrust lawsuit venued in Nevada.  The rather long (27 pages to be exact) goes through each and every paragraph of the Plaintiffs’ Complaint.

After the court denied the UFC’s motion to dismiss, per the rules of federal civil procedure, the company had to file an Answer to the Complaint.  Per rule 8(b) of the Federal Rules of Civil Procedure, the answering party must admit, deny or state that they do not have knowledge to admit or deny the allegation.  However, according the rules stating that you lack knowledge serves as a denial.  It is standard that parties address each and every sentence in a Complaint and even if the statement or allegations may not need an admission or denial, attorneys are ultra-careful and deny most allegations to ensure that there is nothing that might be construed as an admission.

In the Answer the defendant may set forth “Affirmative Defenses” which are facts not within the plaintiffs’ complaint which might defeat the plaintiffs’ allegations.

The Answer filed by the UFC’s attorneys, Boies Schiller and Campbell and Williams does not include many revelations as most Answer’s do not reveal too much.

Zuffa Answer to Plaintiffs' Consolidated Amended Complaint

Here are some of the more interesting parts of the Answer:

  • Probably not too interesting, but Zuffa denies it violated the Sherman Act or engaged in any anticompetitive activity, or that it has injured the Plaintiffs in any way.
  • Zuffa’s annual gross revenues for 2015 exceeded $500 million dollars (page 3, paragraph 7). Although Zuffa remains vague on its revenues, the statement is a conservative estimate from Lorenzo Fertitta’s assertion it made $600 million in 2015.
  • When plaintiffs cited an article or photo included in its Amended Complaint (see paragraph 8 and 12, page 4) and, the UFC did not admit to the veracity of the article or photo. Instead, it indicated the source of the article would be the place to determine the truth of the statement.
  • Zuffa objects to the definition of “Elite Professional MMA Fighter” for being “vague, unclear, confusing, misleading and without any objective or quantifiable basis or any standard usage in any industry.”
  • It notes that the video games UFC Undisputed 2015 sold over 2 million units while UFC Undisputed 2009 sold over 3.5 million units.
  • It notes that Fedor Emelianenko turned down offers to fight in the UFC.

In addition, Paul Gift of Bloody Elbow took at look at the discovery efforts ongoing in the lawsuit.  So far, according to the report 17,909 documents totaling 239,923 pages have been provided from Zuffa’s electronic fighter files.  It is in addition to 108,000 documents provided late last year.  The parties are still haggling over details in the discovery process including custodians (individuals who might have discoverable documents), search terms (the words/phrases used to identify potential relevant documents), relevant time frame among others.

The discovery phase continues as the parties indicate that they have served discovery requests on third parties which should add another level of complexity to this process as the third party lawyers will get into this situation.  Certainly, the attorneys for these third parties will want to ensure that its clients are protected.

Payout Perspective:

Nothing terribly earth-shattering from the Answer.  As in most lawsuits, you want to be as vanilla as possible when providing an Answer.  The Affirmative Defenses do not reveal too much about litigation strategy as well as many are very much form defenses to the lawsuit.  Watch for the discovery fight to continue as third parties were served discovery requests.  Do not be surprise if we see attorneys for the third parties file motions to narrow the scope of discoverable information.

New York AG responds to UFC request for PI ruling

January 25, 2016

Monday is the deadline set by the UFC in its hopes to obtain a ruling on its Preliminary Injunction to hold UFC 198 at New York’s Madison Square Garden.  It had requested that Judge Kimba Wood rule on the issue lest they need to move the event for marketing and event planning reasons.  New York offered its response to the alleged deadline in a letter to Judge Kimba Wood.

The Office of the Attorney General for the State of New York responded to the letter from the UFC to the court in which the company requested a ruling on the preliminary injunction.  In a January 20, 2016 letter, the New York AG issued its response to the UFC request.  New York argues that moving the April 23, 2016 event reveals that the UFC could have scheduled the event at a later date.  This, according to New York’s contention, means that the UFC “can mitigate if not eliminate the alleged “irreparable” harm it says it will suffer from not holding events in New York.”  Thus, New York argues to the court that the UFC letter “adds nothing to, and indeed detracts” from the UFC’s preliminary injunction request.

New York PI – Letter From NY Respondijng to Zuffa Letter

Payout Perspective:

Perhaps a moot point for the hoped UFC 198 at MSG as the UFC intends to seek another venue if there is no ruling by today (Monday, January 25th).  But, the New York letter offers some legal strategy.  By requesting a ruling from the court and issuing a tacit ultimatum, the UFC indicated that it would move its April event if a ruling had not been issued by today.  Since there appears to be no ruling, it is moving the event to another venue outside of New York.  Capitalizing on this move, New York argues that since the UFC is moving the event, there is no “irreparable harm,” an argument needed to prove a preliminary injunction is warranted.  New York will likely bring this letter up again in later arguments for a PI by the UFC citing that there is no immediate harm to the company as there are comparable alternatives to holding an event in New York.  We shall see if there will be an official statement from the UFC this week about the venue for UFC 198.

Despite ban, Shlemenko to fight in Russia

January 23, 2016

MMA Junkie reports that former Bellator middleweight Alexander Shlemenko is slated to fight in Russia despite a three-ban by the California State Athletic Commission for alleged steroid use.

Last June, Shlemenko was suspended 3 years and fined $10,000 by the California State Atheltic Commission.  It was the harshest penalty against an MMA fighter since it began regulating the sport.

Shlemenko filed a lawsuit in California seeking judicial review of the commission ruling.  The case is stil ongoing, but Shlemenko believed that he could no longer wait on a determination and took the fight in Russia for the M-1 Global promotion.  According to a report from Bloody Elbow, Shlemenko stated that Bellator gave him written permission to fight for M-1.

The CSAC indicated that it would not take further administrative action against Shlemenko since it had no jurisdiction.  It is not known whether the CSAC would use Shlemenko’s decision to fight elsewhere in the court case.

Payout Perspective:

At the age of 31, you can understand why Shlemenko is seeking somewhere to continue his career.  Despite being banned by the CSAC, one had to know that this would be a possibility with a 3 year ban.  The inevitable return of Shlemenko reflects the fact that a state commission’s reach when banning fighters can only be so far.  Even if Shlemenko were to lose his court case, it’s clear that a fighter can find other promotions to continue fighting if the promotion is willing.

With revocation of California license, Rousey’s trainer will appeal

January 21, 2016

Edmond Tarverdyan will appeal the revocation of his California State Athletic Commission license at next month’s commission meeting on February 2nd.  The trainer for Ronda Rousey cornered Travis Browne’s fight last Saturday in Massachusetts but will need to appear before the CSAC to obtain his license from California.

Sherdog’s Greg Savage spoke with CSAC Executive Director Andy Foster who indicated that Tarverdyan’s license was revoked for violation of rule 210(b) which relates to falsifying his application to be a ring second.

Section 210(b) states:

“Falsification in whole or in part of a material fact or presentation on any application for a license shall result in a license being denied, and if previously granted, revoked unless otherwise ordered by the commission.”

It is unclear what the falsification might be.  Taverdyan is going through a bankruptcy proceeding in which he claims he has not made a salary or paid taxes in several years.

The bankruptcy trustee, who will decide whether or not Tarverdyan’s Chapter 7 Bankruptcy will go through, has requested that he is given more time to analyze documents and is thus requesting the deadline to determine a discharge continued from February 2, 2016 to May 16, 2016.  The trustee has requested that Tarverdyan’s meeting of the creditors hearing continued to provide further documents and/or for time to review documents related to Tarverdyan’s case.

Payout Perspective:

Hard times for Tarverdyan.  Although his fighter, Travis Browne, won Saturday night, his personal and professional life is going through turmoil.  Without a license to second a fighter in California, it prohibits him from earning money (at least in the state of California).  Whether or not the revocation will be honored by other states is unknown.  He was able to corner Browne on Saturday so there appears to be no issue with at least the state of Massachusetts.  We shall see what Tarverdyan will say at the CSAC hearing on February 2nd.

UFC request court ruling on PI by Monday or will move UFC 198 out of New York

January 20, 2016

Attorneys for the UFC have issued a letter to Judge Kimba Wood of the Southern District of New York requesting a ruling on its Preliminary Injunction request which would grant the company to hold a UFC event at Madison Square Garden in April.

Citing its need to market and plan the event, it is requesting that the Court issue a ruling by January 25.  Previously, the UFC had requested oral argument on the matter to argue its Preliminary Injunction request and the opposition filed by New York.

New York PI – Letter From Zuffa Requesting Ruling by 1.25 by JASONCRUZ206

The UFC stated that if no ruling, even a limited order enjoining the Attorney General from interfering with the scheduled event, is determined by January 25th, it will “lock in and market an event outside New York for its April 23rd event.”  They indicate that they would try again in the fall and amend its Preliminary Injunction motion papers to reflect the new date.

Payout Perspective:

You may recall that New York was granted two extensions to file opposition to the Preliminary Injunction.  Zuffa had requested oral argument but the court had not issued a ruling as to whether it would agree to give Zuffa court time to do so.  Courts may issue rulings based on the court filings and not need the parties to argue the matter.  Parties must request time to argue if they feel compelled to do so.

Courts usually do not like ultimatums issued to them.  Despite the UFC’s need (legitimate or not) to have a ruling soon to determine to plan and market for April, Courts will not succumb to this tactic.  We will see if Judge Wood will have something to the parties by this Monday.

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